Talullah, 19, says she isn’t happy about being charged for using ATMs. Source: News Corp Australia

REFORMS meant to cut the cost of using a cash machine have failed, exposing consumers to a fee-ding frenzy.

Five years after the Reserve Bank of Australia imposed a “direct charge” model it said would “lower the cost of ATM services” the majority of ATM operators on its watchlist are slugging consumers up to 67 per cent extra. None has cut fees.

Rising price ... when it comes to ATM charges, fees of $2.50 and higher are becoming common.Source: News Corp Australia

Australians paid $627 million in the past 12 months to get hold of their own money via cash machines owned by institutions other than their own.

As new research reveals so-called “foreign” ATM charges are now the most hated finance fee, there are calls for corporate or consumer cops to probe what’s gone wrong.

“It was promised that competition would mean that fees would come down. This has not been the case,” said Consumer Action Law Centre (CALC) CEO Gerard Brody. “Market investigation by a competent regulator is needed to ensure competition is working and consumers aren’t being ripped off.”

High price ... Aussies have forked out $627 million in the past 12 months on ATM fees.Source: News Corp Australia

Choice spokesman Tom Godfrey said it supported the CALC’s call: “Consumers deserve better and if that means regulatory intervention then so be it.”

Australia Institute research fellow David Richardson said: “You need some sort of regulatory structure that means as a condition of you banking licence you make (ATMs) free.”

The one benefit from the RBA’s changes may not last. The reforms decreed the fee be displayed to ATM users prior to them completing a transaction so they could cancel without cost if desired. This initially triggered a fall in foreign ATM use, from 44 per cent of all cash machine transactions to 38 per cent. However, the proportion is back up to 42 per cent, RBA data shows. It argues the proportion of ATM transactions incurring a fee is still falling, a claim based on consumers keeping diaries. It says this change in behaviour is saving savvy consumers more than $100 million a year.

Too much ... “foreign” ATM charges are now the most hated finance fee, research has revealed.Source: News Corp Australia

The Australia Institute and Choice note the RBA never said the reforms were aimed at behavioural change. They were supposed to put “downward pressure on ATM fees”.

Instead, fees are rising. A survey by comparison service Mozo shows eight of 14 ATM operators the RBA had been monitoring until 2010 have since increased their charges. Of the four big banks, only NAB has raised. The quartet all now charge $2.

But fees of $2.50 and higher are becoming common. When direct charging was first considered in 2001, it was claimed it cut costs from $1.50 to 50c.

Over it ... banking reforms meant to cut the cost of using a cash machine have failed.Source: News Corp Australia

The Australia Institute’s Mr Richardson said operators could still make a profit if they charged just 70c.

The CALC’s Mr Brody said: “There is no doubt that $2 is far greater than the cost of providing the ATM service.”

Meantime, new Galaxy Research reveals “foreign” ATM charges are now the most hated finance fee. Thirty-eight per cent of respondents to a national poll of more than 1000 people nominated ATM fees as topping the loathing list. Nearly half of low-income households said it was the most hated.

The research was conducted for ING, which will today announce it is offering a debit card with free ATM access anywhere in Australia when $1000 is deposited per month.

“Australians find ATM fees annoying and we have found a way for customers to avoid them completely no matter which ATM machine they use”, said ING executive director John Arnott.

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